Attacks on consumers mounting, over arbitration

In an amazingly lopsided editorial, the Albuquerque Journal published this hit piece, slamming the Consumer Financial Protection Bureau for its gutsy work to restore your ability to fight back in court, as a consumer, by joining forces with other consumers who have also been victimized by crooks who engage in illegal practices:

Albuquerque Journal editorial

Here’s the letter to the editor I sent them, in response. However, it won’t be too surprising if it doesn’t appear in print — for reasons you can readily guess:

Funny — this newspaper didn’t object when the car dealers got a special exemption from the Federal Arbitration Act, that allows them to sue anyone they please. Since then, they have sued auto manufacturers, the federal government, their customers, and each other, and somehow you are fine with that, but apparently think their customers do not deserve to have the same access to the courts.

When Congress restored the right to go to court, for car dealers, the National Automobile Dealers Association wrote to members of Congress and promised not to oppose restoring the same rights to car buyers. Then they turned around and killed a bill that would have done exactly that.

If consumers don’t win back our rights through the CFPB’s rulemaking, then it looks like we will have to resort to free market solutions, like not buying another car from a dealer until we have the same legal protections they do.

Here’s the letter the car dealers sent to Members of Congress

And —  in case you haven’t already seen enough hypocrisy in this battle, here’s what Republican Senator Chuck Grassley of Iowa had to say, in favor of the legislation he authored, giving car dealers a special exemption from being forced to arbitrate their claims, in order to purchase a franchise to sell cars:

“While arbitration serves an important function as an efficient alternative to court, some trade-offs must be considered by both parties, such as limited judicial review and less formal procedures regarding discovery and rules of evidence. When mandatory binding arbitration is forced upon a party, for example when it is placed in a boiler-plate agreement, it deprives the weaker party the opportunity to elect another forum. As a proponent of arbitration I believe it is critical to ensure that the selection of arbitration is voluntary and fair…Unequal bargaining power exists in contracts between automobile and truck dealers and their manufacturers. The manufacturer drafts the contract and presents it to dealers with no opportunity to negotiate…The purpose of arbitration is to reduce costly, time-consuming litigation, not to force a party to an adhesion contract to waive access to judicial or administrative forums for the pursuit of rights under State law.”

Senator Grassley also said:

“This legislation will go a long way toward ensuring that parties will not be forced into binding arbitration and thereby lose important statutory rights. I am confident that given its many advantages arbitration will often be elected. But it is essential for public policy reasons and basic fairness that both parties to this type of contract have the freedom to make their own decisions based on the circumstances of the case.”

Couldn’t have said it better myself. So how come he and his colleagues in the House have changed their tune, when it comes to consumers?

Could it be that Sen. Grassley and the Republican Congress rely on campaign contributions from Wall Street crooks who pass on a tidy portion of the $$ they extract from consumers, via the Rip-off TAX? Hmmmmm….

Buy a car – surrender your rights?

One more reason not to buy a car from a car dealer:  when you do, they force you to give up your right to sue them if they cheat you.  So say good-bye to being able to take advantage of consumer protection laws.

Think a dealer wouldn’t dare roll back the odometer? Think again. They just slip a clause in your contract that says you can’t sue. Then when you find out your low-mileage car actually has over 100,000 extra miles that “disappeared” from the odometer — good luck trying to sue them under the Federal Odometer Act.

Car dealers used to face tough sanctions, including punitive damages, for ripping off consumers. But with rare exceptions, those days are gone.  That’s because car dealers insert “arbitration” clauses into their contracts. Then, after you’ve been shopping, test-driving cars, and negotiating for an average of 4 hours, they shove a stack of documents across a desk and tell you to “sign here, here and here.”

What they don’t tell you is that when you sign, you are giving up your rights under state and federal consumer protection laws. So forget hauling them before a judge or jury, who can throw the book at them. Instead, if you get any hearing at all, it’s before an “arbitrator” whose company just happens to be paid by — you guessed it — the dealer.

Under rulings by the Republican majority on the U.S. Supreme Court, this is perfectly legal.

Ironically, the dealers got a special exemption from Congress that allows them to sue anyone they please. They’re free to use the courts. But you can’t.

Evidence is mounting about how biased and unfair arbitration is. Check out this new report, issued by the Consumer Financial Protection Bureau. No wonder car dealers HATE this consumer watchdog agency. It shows how rigged the game is, when you buy a car from a dealer:

Consumer Financial Protection Bureau report

Don’t end up like Jon Perz, who has been waiting over 7 years for justice, after a car dealer in San Diego sold him an unsafe car.

YouTube Video of used car nightmare — over 1.3 million views

Be a smart shopper. Check out CARS’ car-buying tips for how to get a safe, reliable used car — without having the hassle or risk of buying from a dealer:

CARS Used Car Buying Tips

Happy, safe car shopping!

 

 

 

 

 

 

 

 

One more reason NOT to buy a car from a car dealer

Even the auto dealers themselves have to admit:  many car buyers dread buying cars from auto dealers. Young people are especially wary.  And for good reason.

Car dealers keep selling unsafe, recalled used cars to consumers, putting them, their friends and family, and other motorists at risk of death or serious, debilitating injuries.

And as if that weren’t bad enough, they also insist that you surrender your Constitutional rights as part of the price of buying a car from them.

Good luck trying to buy a car from a dealer without a “gotcha” clause hidden in the contract that says you give up your Constitutional right to take them to court, and benefit from  our nation’s hard-won consumer protection laws. Like laws against rolling back odometers, selling “junk” cars that are advertised as being “in mint condition,” or engaging in other forms of cheating, lying, fraud, and thievery.

And get this:  the dealers got a special exemption from Congress — just for car dealers —  that allows them to keep THEIR Constitutional rights. So they can take anyone they want to court, and use the laws that benefit THEM. But they killed a bill that would have protected YOU from losing your rights when you sign on the dotted line to buy a car from them.

If you’re fed up with car dealers and their scams, check this out:

Cleveland Plain Dealer: Arbitration: What you don’t know about fine print can hurt you

And let your local car dealers know you’re not buying from them until they clean up their act, and you don’t have to surrender your rights to buy a car from them.

Good news for car buyers — Richard Cordray Confirmed!!

At last, in a huge, sweet victory for struggling consumers, Richard Cordray has been confirmed as Director of the Consumer Financial Protection Bureau. The CFPB, first envisioned by now-Senator Elizabeth Warren, was created to be a watchdog for consumers in the financial marketplace.

Democratic legislators in Congress created the agency when they voted for the Dodd-Frank Wall Street Reform Act, in the wake of the largest financial meltdown since the great Depression.

Since then, Republicans in Congress have tried repeatedly to weaken the agency and put it under their thumbs. That way, they could tie it in knots and keep it from doing its job.  Republican senators had blocked Cordray’s nomination for years, and relented only when Democratic Senators forced their hand, by threatening to change the filibuster rules that had allowed the Republican minority, at the behest of powerful, unscrupulous special interests, to block a vote on Cordray’s nomination and other nominations to vitally important posts that directly affect the lives of  ordinary Americans.

Cordray’s confirmation is a huge victory for President Obama, US Senator Elizabeth Warren,  the consumer and labor movements and allied groups, and other pro-consumer forces who joined together to form Americans for Financial Reform. And for all the individual consumers who petitioned Congress and spoke up for letting the agency do its job.

Republican members of Congress, and some Democratic members, led by US Rep. Gary Peters of Michigan, granted auto dealers a special exemption from the Consumer Financial Protection Bureau’s authority, under the false claims that they don’t engage in lending themselves (they do), and that they’re not traded on Wall Street (many of them are).

However, the CFPB does have authority to police auto lending. It may also act to curb lenders from taking away consumers’ Constitutional rights when they purchase a car, trapping them with “arbitration” clauses that keep them captive to a secret, private “arbitration” system that the lenders control.

This is welcome news indeed for the car-buying public. The agency has already issued a warning to auto lenders not to keep engaging in discriminatory lending practices that result in minority car buyers paying more for financing — not based on their creditworthiness, but on race.

The agency may also issue rules to curb auto dealer markups on interest rates, that cost car buyers over $25.8 billion annually in excessive interest charges pocketed by dealers and lenders — money that could be spent on technology that saves lives and helps clean the air and slow climate change.

If you have a complaint about auto lending, here’s where to complain at the CFPB:

Consumer Financial Protection Bureau–file a complaint here